Which banks across Brazil, Russia, India, China and South Africa have performed the best in The Banker’s newly introduced ranking that measures a lender's performance across various key criteria? Marie Kemplay reports.

It has been almost two decades since British economist Jim O’Neill, then employed by Goldman Sachs, first coined the term ‘BRIC economies’, referring to Brazil, Russia, India and China. In his seminal 2001 paper, ‘Building better global economic BRICs’, he outlined the important role that these emerging market economies were expected to play on the global stage. In 2010, South Africa also became an accepted part of the grouping.

Since that time, we have charted the progress of those five countries’ banks via The Banker’s annual Top 1000 World Banks ranking. For instance, in 2001 there was just one Chinese bank, ICBC, in the top 10, ranked in seventh place. In our 2019 ranking there are four Chinese banks in the top 10 and they hold the highest four positions. BRICS banks also now make up one-fifth of our Top 1000 rankings, with 200 banks in the list, compared with just 57 in 2001.

Delving deeper

But the Top 1000 World Banks ranking, based on Tier 1 capital, only tells a part of the story. A bank’s size does not provide the full picture of how well it is doing overall. The Banker Database also contains a huge amount of additional information about how banks across the globe have performed each year, so we have developed a new model that examines bank performance based on 18 different indicators across eight key categories – growth, profitability, operational efficiency, asset quality, return on risk, liquidity, soundness and leverage – to come up with an overall Best-performing Banks ranking. For our BRICS dataset we have looked at the 10 biggest banks by Tier 1 capital in each of the five countries and then ranked them from one to 10 (see methodology). 

Banco do Nordeste do Brasil, Alfa Bank (Russia), HDFC Bank (India), China Construction Bank and African Bank (South Africa) came top of our Best-performing Banks rankings in each of their respective countries – though interestingly, none are the largest nationally by Tier 1 capital. For instance, Banco do Nordeste and African Bank are a respective seventh and eighth largest in their countries, showing that being the biggest does not guarantee the strongest performance.

Each of the five top banks scored differently across our eight performance indicators, but all have in common a top ranking for operational efficiency – a measure based on cost-to-income ratio figures in 2017 and 2018 – demonstrating the importance of this metric for ensuring a good overall performance.

Brazil stalls

Brazil’s stuttering economy has created a challenging environment for its banks in recent years. For instance, only three banks out of the 10 in our sample saw their pre-tax profits increase year on year between 2017 and 2018.

Out of all the Brazilian banks in our sample, Banco do Nordeste do Brasil leads the way. In addition to its top placement for operational efficiency, it places second for both the liquidity ranking (a measure based on loans-to-asset and loan-to-deposit ratios) and leverage ranking (a measure based on total liabilities to total assets).

Banco Daycoval, the ninth largest Brazilian bank in our sample, punches above its weight, coming second in our rankings. Its performance on profitability (a measure based on pre-tax profits, return on assets, return on equity, profit margin and asset utilisation) is particularly impressive. It had the highest return on equity (ROE) ratio out of all 10 Brazilian banks in 2018, at 23.46%, compared with next highest Banco do Nordeste’s 18.46%, as well as impressive year-on-year growth in pre-tax profits and a healthy profit margin.

Claudio Gallina, senior director and head of South America and the Caribbean, financial institutions, at Fitch Ratings in São Paulo, says: “Banco Daycoval is a very stable bank, which performs above average for its peer group. Its management knows its client base very well and it is very strategic in how it operates.”

Caixa Econômica Federal is at the bottom of our Brazilian top 10. This is despite having the second lowest non-performing loan (NPL) ratio in the country.

However, its relatively high impairment charges in 2018 of $4.6bn have dragged down its asset quality score. It also struggled with its pre-tax profits in 2018, and both its lending and deposit-taking volumes, as well as its operating income, all of which decreased year on year. However, it is not all doom and gloom: Mr Gallina believes the bank has done good work in recent years to improve its capital base and to reduce the concentration of its credit portfolio, which he expects will begin to pay off.

Russia stabilises

The Russian banking sector is beginning to stabilise following a turbulent few years involving high-profile bail-outs and recovery programmes for some of the country’s biggest banks.

In our ranking, it is Alfa Bank, Russia’s fourth biggest bank, that puts in the most impressive performance. It is the best-performing bank across five out of the eight indicators in the country, as well as coming second for profitability and having the highest capital-to-assets ratio and the highest return on risk-weighted assets ratio.

Sberbank, Russia’s largest bank, finds itself in the middle of the table. Even with the country’s highest ROE, at 21.57%, and the highest pre-tax profits in the group, this could not outweigh the fact that overall its performance does not outshine its peers.

But it is VTB, Russia’s second largest bank, that has struggled the most. In particular, a poor showing in asset quality – for instance, in 2018 it had the second highest total impairment charges and provisions, standing at $2.8bn – dragged down its overall score. VTB in its current shape represents a combination of a corporate arm of VTB and its retail subsidiary VTB24, which merged on January 1, 2018. Anton Lopatin director, Europe, Middle East and Africa banks, at Fitch Ratings, says: “Prior to the merger, corporate VTB’s performance was weaker than that of VTB 24. The latter historically reported decent returns and accounted for a bulk of the group profits.”

India’s NPL problems

The Indian banking sector had a tough year in 2018 as it continued to grapple with its NPL issues. Across the board most Indian banks in our sample struggled on profitability, with low or negative growth in profitability measures year on year.

Getting NPL levels under control has been a major challenge for Indian banks, therefore HDFC’s 1.39% NPL ratio is an impressive achievement, however its year-on-year increase in impairment charges brought down its overall asset quality score. It is, however, the leading bank for operational efficiency, leverage and soundness, which have helped it to gain the top spot for India.  

State Bank of India, the country’s biggest bank by Tier 1 capital, finds itself in the middle of the table, in sixth position. It performs the worst on operational efficiency; however, it is the best performing for asset quality. Between 2017 and 2018, it significantly reduced its impairment charges and provisions, as well as significantly decreasing its NPLs.

Yes Bank, a private bank and the eighth largest Indian bank in our sample, performed the worst, scoring the lowest score on profitability, asset quality and return on risk.

China’s familiar pattern

China’s big four banks dominated our 2019 Top 1000 World Banks ranking, taking the top four spots, and it is a similar story in our best-performing Chinese bank rankings. China Construction Bank, Bank of China, Agricultural Bank of China and ICBC are all ranked among the top five best-performing banks in the country. An outsider – China Merchants Bank – is in second position with top scores in profitability and asset quality. But its strong performance was not enough to beat China Construction Bank (CCB), which comes first in four out of the eight metrics. CCB has the lowest liabilities to assets and the highest capital-to-asset ratio.

ICBC, the world’s biggest bank by Tier 2 capital, comes fifth in our top 10 and scores badly on growth in particular – although it would perhaps be unfair to expect the world’s largest bank to score strongly on that metric.

China Citic Bank, the country’s 10th largest bank (and smallest in our sample), is at the bottom of the table for performance. Although it does not rank the lowest in any of the eight metrics, nor does it perform well in any. It has the lowest ROE in our sample of Chinese banks and the highest impairment charges as a percentage of total operating income.

South African woes

It has not been an easy time for South Africa’s economy in recent years, with high levels of unemployment and persistently low growth, as well as political instability. But for one bank at least it has been a time of recovery and renewal. After it was put under curatorship in 2014 because of problem debts, and bailed out in 2016, African Bank has undergone a long restructuring process. It now seems be reaping some of the fruits of that, with top scores in five out of the eight indicators, coming in first place overall for South Africa.

The bank ranks first for soundness and leverage, where it has both the highest capital to assets and lowest liabilities to total assets ratios in the group. However, there is still room for improvement as it comes in ninth place for both asset quality and liquidity. Although its asset quality remains compromised, with a high NPL ratio, it is making good progress. Its NPL ratio decreased by nine percentage points year on year, from 43% in 2017 to 34% in 2018.

The bank at the bottom of the South Africa table, Sasfin, is a small bank that has historically focused on serving small and medium-sized enterprises and entrepreneurs. It has struggled on profitability, asset quality and liquidity, as well as its operational efficiency and return on risk (a measure of returns against risk-weighted assets). 


The Banker has developed a model that ranks bank performances based on 18 indicators across eight key categories. Banks are assigned a ranking in each category as well as an overall ranking based on their performance across all eight areas.

The performance categories and indicators are: 

  • Growth: annual percentage growth in assets, loans, deposits and operating income.
  • Profitability: pre-tax profits growth, return on assets, return on equity, profit margin, asset utilisation (and annual improvement in these ratios).
  • Operational efficiency: cost-to-income ratio (and annual improvement in this ratio).
  • Asset quality: impairment charges and provisions growth, non-performing loans, impairment charges as a percentage of total operating income (and annual improvement in these ratios).
  • Return on risk: return on risk-weighted assets (and annual improvement in this ratio).
  • Liquidity: loan-to-asset ratio, loan-to-deposit ratio (and annual improvement in these ratios).
  • Soundness: capital assets ratio (and annual improvement in this ratio).
  • Leverage: total liabilities to total assets (and annual improvement in this ratio).

Our analysis assesses performance in 2018 and year-on-year percentage changes between 2018 and 2017 (the two most recent full-year datasets held by The Banker).

For our BRICS banks ranking we took the 10 biggest banks by Tier 1 capital in Brazil, Russia, India, China and South Africa and assessed performance within each country.

We did not include any foreign-owned banks in our rankings. We include banks for which we hold audited year-end financial results. 


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